The cutoff of Supplemental Nutrition Assistance Program benefits to 3.5 million Texans that depend on the program could have ripple effects on the state economy beyond those directly affected.
Those who rely on SNAP to buy groceries for themselves and their families make up about 12% of all grocery sales nationwide, according to the National Grocers Association. Experts say the sudden loss of that income will mean SNAP recipients have less money to spend in Texas grocery stores.
“Once all those benefits are exhausted, it will be a significant impact on sales in the stores depending on the size of the store and the location of the store, then it will impact product, and then in the long term, it impacts employment,” said Gary Huddleston, the grocery industry consultant for the Texas Retailers Association, a trade association that represents retailers and grocery stores in the state.
The food assistance payments to the nation’s poorest citizens will come to a halt on Saturday as a result of the second-longest government shutdown in U.S. history. More than 40 million people nationwide use the program, including the 3.5 million Texans, 1.7 million of whom are children.
The U.S. Department of Agriculture notified states that if the shutdown did not end by Monday, SNAP benefits would be halted this Saturday.
“I think people are going to be faced with really difficult decisions and people will go hungry if the benefits are delayed,” said Celia Cole, CEO of Feeding Texas.
The start of each new month is when an average of $400 a month for qualified individuals is loaded on to a debit-like card that can then be used to purchase groceries. About $614 million flows into the state each month through the SNAP program.
Grocery retailers typically time larger shipments of goods to the start of the month to coincide with the reloading of those cards, Huddleston said. In the short term, simply the threat of a SNAP cutoff is creating headaches for grocers who stand to eat the cost of perishable products that are not purchased, Huddleston said.
Larger grocery companies like H-E-B and Kroger will be better equipped to handle disruptions to its regular delivery schedule, Huddleston said. However, smaller grocers and convenience stores, particularly those located in areas with high enrollment in the SNAP program, make up a majority of the stores that accept SNAP credits and they have less wiggle room to navigate the financial strain on their customer base, Huddleston said.
The economic pain will not be felt evenly throughout the state. Poorer urban areas, small towns in South Texas, southeast Texas and West Texas have high rates of residents enrolled in SNAP. An extended SNAP cutoff also risks worsening food deserts — areas with poor access to grocery stores — by straining the finances of the few grocery stores that serve those areas, particularly in smaller towns, Bradt said.
Grocers across the state are currently making “critical decisions on product” as the Saturday cutoff of benefits looms, Huddleston said. A drop in sales, particularly in smaller stores, could quickly snowball into layoffs, Huddleston added.
This sudden change in customers’ purchasing power is known as “demand shock” and could lead to increased costs for grocery retailers that get passed on to all customers, said Sandra Black, a professor of economics at the University of Texas at Austin.
Because food is essential, SNAP recipients are likely to reduce spending in other areas, like clothes and entertainment, to purchase groceries, said Jacob Bradt, an assistant professor of business, government and society at the University of Texas at Austin.
With millions of Texans relying on SNAP benefits, these individual purchasing decisions are likely to ripple out across the Texas economy, impacting sectors outside of retail, Bradt said.
With the economy already strained under the weight of tariffs and an unsteady labor market created by aggressive immigration enforcement, the loss of SNAP funding will be one more injection of uncertainty to an already unsteady economy, he added.
Huddleston and the economists agree, saying the longer the government shutdown lasts, the worse the effects of the SNAP funding cutoff will be for individuals, grocers and the state economy as a whole.
“For small retailers, they’ll have to make critical decisions within the first two weeks of November,” Huddleston said.
Disclosure: Feeding Texas, H-E-B, Texas Retailers Association and the University of Texas at Austin have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.
This article first appeared on The Texas Tribune.
